A Pfennig For Your Thoughts February 3, 2020 * Currencies, Gold, and bonds all rally on Friday… * Chiefs win the Super Bowl! Good Day… And a Marvelous Monday to you… Congrats to the Kansas City Chiefs as they won the Super Bowl last night! NFL Champions! I was rooting for K.C. all the way… Hey! They’re a Missouri Team! On the Eastern border of the state, we don’t claim them for baseball, but for football they’re all ours! (since the Rams left town that is!) I’m heading north to Port St. Lucie again this morning, so this should be shorter than usual, but… stranger things have happened! And yesterday was Ground Hog Day, and Phil didn’t see his shadow, which means an early spring… Ground Hog Day is also one of my fave movies… The Cure greets me this morning with their song: Lovesong… The
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A Pfennig For Your Thoughts
February 3, 2020
* Currencies, Gold, and bonds all rally on Friday…
* Chiefs win the Super Bowl!
Good Day… And a Marvelous Monday to you… Congrats to the Kansas City Chiefs as they won the Super Bowl last night! NFL Champions! I was rooting for K.C. all the way… Hey! They’re a Missouri Team! On the Eastern border of the state, we don’t claim them for baseball, but for football they’re all ours! (since the Rams left town that is!) I’m heading north to Port St. Lucie again this morning, so this should be shorter than usual, but… stranger things have happened! And yesterday was Ground Hog Day, and Phil didn’t see his shadow, which means an early spring… Ground Hog Day is also one of my fave movies… The Cure greets me this morning with their song: Lovesong…
The Currencies, Gold, and bonds rallied on Friday… Stocks and Oil did NOT! The Coronavirus is really on the minds of everyone these days, and especially traders who are seeing the worlds 2nd largest economy come to a screeching halt… The dollar just got thrown in front of a buss for good measure, as Gold, bonds and euros were the picks on Friday… You know, I don’t know for sure, but this Coronavirus could be the snowflake/ more like an avalanche that causes the strong dollar trend to end… I guess we’ll know for sure when March comes around… But wouldn’t it be great to buy some currencies like the euro, rubles, francs, and krone, on a hunch that they go upward from here? Besides even if they don’t, now, they will eventually, and you will have gotten them on the ground floor…
The 10-year Treasury’s yield had fallen to 1.51% folks… The bond boys are telling us something bad is going to happen in the U.S. economy, that interest rates will be coming down, and other bad things are about to happen… Remember when I told you that I truly believed that the 10-year’s yield would revisit its previous low of 1.38% from about 5 years ago? Well, it certainly appears to be heading in the right direction, doesn’t it? Of course!
I say “had fallen to 1.51%” because that’s where it was a the close on Friday. But in the overnight markets the currencies, Gold and bonds have given up some of their gains from Friday… UGH! The euro has lost about 1/4-cent, Gold is down nearly $11, and the 10-year’s yield is 1.54%, still a deep drop from where it began, but… not a linear move for sure!
And with Oil still slip sliding away, the Petrol Currencies, led by the Russian ruble, are still getting smacked around… The only Petrol Currency to be showing some life these days is the Canadian dollar/ loonie…
I used to quote Grant Williams all the time, when I subscribed to his newsletter, which in my opinion is the best newsletter money can buy. So now to get his bits of wisdom, I have to rely on Twitter… And that’s where I found this quote from Grant Williams on his Twitter feed… “historians will look back at this post-crisis period as a relatively brief interlude of false prosperity bookmarked by crises caused by obvious policy errors that appealed to cheap political passions, weak intellects, low morality and corrupt motives.”- Grant William on Twitter
I think he sums up this past 12 years pretty accurately, don’t you? 3 completed rounds of bond buying known as Qualitative Easing, one round of Twist and Shout, leaving interest rates at zero much too long, and now dragging their feet to cut them in the face of a recession, and another round of “not QE”… These all add up to a real mess folks…
But don’t let it bring you down, it’s only castles burning…. (Neil Young) But it is very appropriate here, I think…
So, Great Britain finally left the European Union…. It happened on Friday, and now after all the euphoria settles down, Great Britain is left with no trade agreements with their two largest trading partners… The U.S. and the Eurozone… Those trade agreements are going to be real problems to complete, and will take up a lot of the lawmakers time in the U.K. I don’t see pound sterling as a viable currency to own in the near future… Now, once these trade agreements are finished, then we might look to pound sterling…
One would think that the U.K. would have these agreements all drawn up ahead of time, but… from what I read, it’s a start from zero thing…
Let’s see… what else can I talk about this morning? That you’re wondering why I picked the euro and franks as currencies to look to buying? I know, I know, they both have negative deposit rates, and I’ve been down on these two for that for some time now… But, if the weak dollar trend ends, the offset currency to the dollar is the euro… And if things get scarier with the Coronavirus then the safe haven trades will get even more attention, and the Swiss franc has always, and I mean always been the safe harbor for currency traders in times like this could end up being… So there!
My view from the cheap seats, tells me that the Exchange Rate Stabilization (ESF) and Plunge Protection Team (PPT) were working overtime in the overnight markets to bring the dollar back, and Gold down… It’s all about keeping the dollar front and center in people’s minds all over the world, folks… But one of these days, there’s going to be some many dollars in circulation that it will be lights out on the ESF and PPT… I’m just saying…
The U.S. Data Cupboard today will have the December ISM (manufacturing index), which has been below the 50 break even level for the last two months or prints… I don’t see the ISM recovering up and beyond the 50 level, and three consecutive months below 50, would seriously point to recession… So look out for that!
The Data Cupboard on Friday last week had the Personal Income and Spending for December, and guess what? Personal Spending was below not only expectations, but… the previous month’s print of 0.4% growth, only growing 0.3%, which in any other month would be OK, but for December? I would think that December’s Spending would have been better than November’s…
To Recap… The U.K. finally left the European Union, but now the difficult part starts… The currencies, Gold and bonds all rallied on Friday, while stocks and Oil did NOT! Grant Williams joins us for this morning’s discussion with his view on the post recession, and he’s not enamored with it, that’s for sure! The Chiefs won the Super Bowl, and Phil the Groundhog didn’t see his shadow, so an early spring is on the way!
For What It’s Worth…. OK… I’ve told you all about how the jobs data is worthless because we don’t know what kind of paying jobs are getting created… It does our economy that needs to grow, no good for min. wage jobs to be created… This article tells the story of what kind of jobs have been added during this record low unemployment period, and it can be found here: https://www.theguardian.com/commentisfree/2018/jul/29/us-economy-workers-paycheck-robert-reich
Or, here’s your snippet: “But the official rate hides more troubling realities: legions of college grads overqualified for their jobs, a growing number of contract workers with no job security, and an army of part-time workers desperate for full-time jobs. Almost 80% of Americans say they live from paycheck to paycheck, many not knowing how big their next one will be.
Blanketing all of this are stagnant wages and vanishing job benefits. The typical American worker now earns around $44,500 a year, not much more than what the typical worker earned in 40 years ago, adjusted for inflation. Although the US economy continues to grow, most of the gains have been going to a relatively few top executives of large companies, financiers, and inventors and owners of digital devices.
America doesn’t have a jobs crisis…. It does have a “good jobs crisis”!
When Republicans delivered their $1.5tn tax cut last December they predicted a big wage boost for American workers. Forget it. Wages actually dropped in the second quarter of this year.”
Chuck again… Yes, that’s another thing I told you about when the tax cut went through, I told you that it wasn’t for me and you, but for corporations and they wouldn’t use it the way they should , choosing to use their new found cash to buy back their company’s stock…. Oh, well… One of these days…
Currencies today 2/3/20 American Style: A$.6999, kiwi .6466, C$ .75553, euro 1.1063, sterling 1.3052, Swiss $1.0367, European Style: rand 14.8705, krone 9.2664, SEK 9.6516, forint 305.22, zloty 3.8837, koruna 22.7676, RUB 63.95, yen 108.52, sing 1.3471, HKD 7.7663, INR 71.41, China 6.9334, peso 18.80, BRL 4.2805, Dollar Index 97.71, Oil $51.77, 10-year 1.54%, Silver $17.78, Platinum $955.18, Palladium $2,274.48, and Gold… $1,578.33
That’s it for today… There was even a Ground Hog Day movie theme to a Super Bowl commercial last night… I laughed at a couple of the commercials, but for the most part, I was not moved… I sure hope my darling granddaughter, Delaney Grace, wasn’t watching the halftime show… I’m just saying… It was warmer in St. Louis yesterday than it was here in S. Florida! But that won’t last, so I hope all my family and friends enjoyed it! I can see steam coming off the ocean as the sun rises this morning… the air temperature is still below normal but will rise to 72 today, so no worries, for me! The Stone Temple Pilots takes us to the finish line today with their song: Interstate Love Song… I hope you have a Marvelous Monday, and please Be Good To Yourself!
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A Pfennig For Your Thoughts